Up Again Spain: Premises and Workplace

Employment

1. What are the key things that employers have to consider in relation to social distancing in the workplace, e.g. open plan or spacing of desks, use of shared equipment, limited access to communal facilities, canteen / restaurant, etc.?

Social distancing in the workplace should be at two meters, both in individual workspaces and in common areas. Crowding should be avoided in common areas.

The Guide recommends the following other organisational and technical steps:

  • implementation of measures to minimise contact between employees and customers or members of the public attending the workplace
  • staggering of working schedules
  • redistribution of work
  • teleworking
  • the workplace entrance and exit should be organised in a staggered manner to avoid crowding both there and on nearby public transport
  • differentiated entrance and exit areas to the workplace should be established, and adequately marked, whenever possible to avoid people crossing in opposite directions

Companies should avoid the registration of the working hours by means of fingerprint.

2. What key hygiene and/or infection prevention measures will employers have to take to ensure a safe workplace e.g. provision of adequate handwashing facilities, regular deep cleaning of offices, etc.?

It is essential for the employer to increase hygiene measures in all areas of the workplace, and to provide the necessary means and tools allowing employees, regardless of their role, to adopt adequate personal hygiene measures.

Cleaning should be intensified compared to normal practice. The employer should implement policies for cleaning and disinfecting the workplace and equipment. In particular, all surfaces should be properly cleaned daily, with an emphasis on areas with frequent contact, such as door handles, railings and buttons.

The personnel carrying out the cleaning should have adequate protection in terms of personal protection equipment.

All workspaces must be periodically ventilated – at least daily and for a minimum period of five minutes each time.

Reinforce air filters and increase ventilation.

For employees, the Guide advises the following measures:

  • hand hygiene (washing at least 40 seconds) with soap and water or hydroalcoholic solution is the main prevention measure
  • covering nose and mouth with a tissue when coughing/sneezing and disposing of it in a covered, pedal bin
  • if tissues are not available, using the inside of the elbow to avoid contamination of hands
  • avoid touching eyes, nose or mouth
  • keep workspaces tidy to facilitate cleaning
  • avoid physical contact when greeting others
  • not using individual protection equipment or professional equipment or tools belonging to other employees
  • maintaining a social distance of two meters

Real Estate

3. Are there any specific obligations, liabilities or duties of conduct imposed on landlords, tenants or visitors with respect to the use or re-use and decontamination of premises; care, cleaning and maintenance of the exclusive and common areas; reporting requirements and/or measures in case of identified infections; health and safety issues - e.g. recommissioning water systems to avoid virus, installation of plexiglass screens, moving desks to comply with distancing. remodulation of fire prevention strategies (entrance/exit routes)? Is any distinction made between asset classes?

If the premises are let on a single-tenant basis and the landlord has delegated management of the premises to the tenant, there is no specific responsibility for the landlord under the COVID-19 containment measures or general legal principles.

If specific services are provided by the landlord (e.g. reception), the health and safety measures imposed by the COVID-19 containment rules must be followed by the landlord.

In multi-tenant situations and shopping centres or business parks, the landlord must ensure that the COVID-19 health and safety measures are adopted for the common areas.

If the premises belong to a condominium, the owners’ association or condominium manager must ensure that in the common areas of the building the applicable COVID-19 containment measures are adopted. The landlord must also inform the tenant of the measures adopted by the condominium manager for the common areas, and recommend the tenant to comply with these measures.

The obligation to control and manage access to retail shops lies with the tenants/shop operators.

The main health and safety obligations concern hygiene and cleaning (e.g. use of mask and gloves, installations of movable partitions and screens, hand sanitiser, frequent ventilation, deep cleaning and disinfection) and social-distancing measures (e.g. floor markings, limited occupancy, policy for reception).

4. Are there any rent suspension measures and/or stay of recourses and actions (including eviction) or any Government support initiatives such as a furloughed building grant scheme (if so, maybe only a part of the building should be re-occupied)? When rent suspension measures are available, what is the usual payment mechanism and timing agreed to by the parties?

Residential lease agreements

There is no exemption from the payment of rent, as none of the measures adopted by the government make it impossible to enjoy the property leased under the lease agreement (whether habitual residence or second homes). As such, the landlord will be complying with its obligation to grant peaceful enjoyment of the property, and the tenant must continue paying the monthly rent.

However, the Spanish government approved on 31 March 2020 the Royal Decree-Law 11/2020, which introduced certain measures regarding the payment of rent by people with low income or people at risk of social exclusion. Tenants may request, until 2 July 2020, a temporary and extraordinary rent deferral, provided that the suspension or total or partial reduction of rent has not been previously agreed by the parties.

If the landlord is a public entity or a “large real estate holder” (meaning owners of more than ten real estate assets, or of a built surface area larger than 1,500 square meters) and no agreement is reached by the parties, the landlord shall decide on a 50% rent reduction or a rent deferral during the period of the national state of alarm (including its extensions) – and, if that period is insufficient in relation to the impact caused by COVID-19, by up to four months after the lifting of the state of alarm.

In the case of the rent deferral, the rent corresponding to these months will be paid by the tenant on a monthly basis and without penalty or accrual of interest, over a minimum term of three years after the lifting of the state of alarm, or after the termination of the four-month period referred to above (and, in any case, within the term of the lease agreement).

On the other hand, if the landlord is not a public entity or a “large real estate holder” and does not accept any agreement, the tenant may request a microcredit without interest or commission, which must be used to pay the rent. Order TMA/378/2020, of 30 April, sets out the criteria and requirements of residential tenants applying for this financial remedy. The loan will cover up to six monthly instalments of rent and will be issued by a bank and guaranteed by the state, through an agreement with the Official Credit Institute (ICO).

Subsidies for an amount up to EUR900 have been approved by the governments of the autonomous communities to protect low-income tenants unable to repay the microcredits referred to above.

Non-residential lease agreements

The Spanish government approved on 21 April 2020 the Royal Decree-Law 15/2020, which introduced the following measures to protect tenants in commercial leases who are self-employed (autonomous workers) and SMEs, and whose activities have been affected by COVID-19:

  • Rent deferral: If the landlord is a public entity or a "large real estate holder" (meaning owners of more than ten real estate assets, or of a built surface area larger than 1,500 square metres), the tenant is entitled to postpone the payment of the rent, without penalty or accrual of interest, during the state of alarm is in force (including its extensions) – and, if that period is insufficient in relation to the impact caused by COVID-19, for a period of up to four months after the lifting of the state of alarm.

    The rent corresponding to these months will be paid by the tenant on a monthly basis during the two years after the lifting of the state of alarm or the termination of the four-month period referred to above (and, in any case, within the term of the lease agreement). Landlords – who are mainly funds and REITs – cannot oppose this rent deferral if it is requested by the tenant.

    In the case of leases, VAT is due at the moment when, according to the agreement signed by the parties, the payment of the rent becomes due. Given that there is a legal deferment of the accrual of the rent, the accrual of VAT will not occur and the landlord will not be obliged to issue an invoice charging VAT to the tenant, nor to pay the amount to the tax authorities (the landlord shall only issue the invoice at the time the rent becomes due).

    The rent deferral shall not in principle apply to the payment of the common expenses and general services to be paid by the tenant under the relevant lease agreement, since the Royal Decree-Law 15/2020, unlike other measures adopted in relation to residential leases, does not expressly refer to the payment of these expenses and services.

  • Other remedies: If the landlord does not meet the requirements referred to immediately above, the tenant shall have the right to request a temporary and extraordinary deferral of the rent. In this case, the landlord shall be entitled to use the legal deposit (amounting to two months' rent) for the payment of the rent. In this case, the tenant shall refund the legal deposit within one year (or within the remaining term of the lease, should it be less than one year). Under the applicable regional regulations, in most cases the legal deposit should have been deposited by the landlords with the relevant public body – it remains to be clarified how the legal deposit will be returned to landlords.

The legal mechanisms set out above shall apply in the absence of any previous agreement between the parties regarding the payment of rent (such as an agreed rent suspension or reduction) and as long as the following conditions related to the activity of the tenant are met:

  • That the tenant does not exceed the limits of Article 257.1 of the Spanish Companies Act, which are:
    • that assets in its balance sheet do not exceed EUR4 million;
    • that the net annual turnover of the tenant does not exceed EUR8 million; and
    • that the average number of workers employed during the ongoing year does not exceed 50.
    • That the tenant's activity has been suspended as a result of the pandemic.
  • If the tenant's activity has not been suspended, the turnover for the prior calendar month has been reduced by at least 75%.

In all other cases where the tenant is not self-employed or an SME, or the requirements referred to above are not met, COVID-19 may qualify, in principle, as a force majeure event for Spanish courts, allowing the tenant to request some concessions during the duration of the state of alarm – particularly if the activity of the tenant has been suspended by any ad hoc regulation approved by the Spanish government and, as a result, the leased premises has been ordered to shut down.

It is in both parties' interest to proactively discuss the problem and reach an out-of-court agreement whereby the rent is reduced or temporarily suspended.

5. Are there specific tax reliefs on payment or collection of rent instalments? Do they apply subject to actual payment or regardless? Do they apply generally or only to specific asset classes?

No specific tax relief has been approved for the payment/collection of rent.

6. Are there any measures regarding relief from the performance of real estate-related contractual obligations?

The main contractual obligation of the tenants under their relevant lease agreements is the payment of the rent. Please see question 4 above for more information.

7. Are there any credit facilities in place to mitigate loss of income for landlords?

No specific credit facilities have been approved by the Spanish government to mitigate loss of income for landlords.

However, the Spanish government approved on 31 March 2020 the Royal Decree-Law 11/2020, whereby certain measures have been implemented in connection with the payment of rent by people with low income, or people at risk of social exclusion.

As such, tenants may request, within three months of the entry into force of the Royal Decree-Law, a temporary and extraordinary rent deferral, provided that the suspension or total or partial reduction of rent has not been previously agreed by the parties.

If the landlord is not a public entity or a “large real estate holder” (meaning owners of more than ten real estate assets, or of a built surface area larger than 1,500 square meters) and does not accept any agreement, the tenant may request a microcredit without interest or commission, which must be used to pay the rent.

The loan will cover up to six monthly instalments of the rent and will be issued by a bank and guaranteed by the state through an agreement with the Official Credit Institute (ICO).

8. Is there any relief from loan repayments / enforcement of loans secured against properties?

The Spanish government has approved measures leading to the temporary suspension of the contractual obligations arising from any mortgage loan contracted by an individual who is in a situation of economic vulnerability.

The mortgage debt moratorium applies only to:

  • the usual/ordinary dwellings (i.e. not including vacation or weekend homes);
  • properties linked to the economic activity developed by entrepreneurs and professionals; and
  • dwellings other than the usual one in a rental situation and for which the mortgage debtor, which shall be a natural person, has stopped receiving the rental income since the entry into force of the state of alarm, or does not receive it within one month after the end of the state of alarm.

The granting of the moratorium suspends the payment of the mortgage debt instalments (principal and interests) . The early repayment clause in mortgage loans will not be applied, nor will late payment interest accrue.

Economic vulnerable debtors are ones that meet the following requirements:

  • the debtors must have become unemployed or, if they are an entrepreneur or professional, suffers a substantial loss of income or decrease of sales (above 40%)
  • the total income of the family unit of the debtor in the month prior to the application of the moratorium must not exceed three times the monthly IPREM (ndicador Público de Renta de Efectos Múltiples) (i.e. EUR537.84 x 3). This calculation shall be increased in the case of children, persons over 65, disability, dependency or illness
  • the mortgage loan instalments, plus the expenses and basic supplies, must be higher than 35% of the net income of the whole family unit
  • as a result of the COVID-19 emergency, the family unit of the debtor must have suffered a significant alteration in its economic circumstances in terms of the effort required to access housing (specifically, where the ratio of mortgage charges over family income has been multiplied by 1.3)

9. Are public services necessary to complete the sale, acquisition or other operation of real estate assets or companies or to establish the right to open for business (planning authorities, notary public, Land Registry, Companies’ Registry, etc.)?

Agreements that require notarial support can be executed, as notaries are operative. In line with the government's multi-stage de-escalation program, the restrictions on notaries will be gradually lifted in accordance with the stage applicable to each territory.

Further, public administrations (e.g. planning authorities, Land Registry, Companies’ Registry) are open to the public (appointments can be arranged, if necessary) and can be contacted by phone, and any formalities can also be carried out electronically.

10. Are there any specific processes or protocols available to consummate real estate operations enabling them to comply with any required social distancing (e.g. electronic signature, etc.)?

Private agreements that do not require any specific form (and so can be signed without notary involvement), such as sale and purchase agreements and lease agreements, are not problematic. Signing occurs through electronic signature or by exchange of correspondence.

Please see question 7 above for information on agreements that require notarial support.

11. Are contractors who were carrying out works within the premises obliged to resume them? Can building sites reopen when they were closed down? Are there any specific provisions in relation to certain asset classes authorising continuation / resumption of works (e.g. healthcare structures)?

As part of the COVID-19 containment measures, construction activities were forbidden between 30 March and 9 April 2020. Further, works in existing buildings where there was a risk of contagion by COVID-19 for persons not related to that activity had been suspended from 12 April until 25 May.

12. Are there remedies or contractual arrangements available to address impossibility or delay for a party to handover premises to another which are/were to be constructed or refurbished, or for such other party to take over those premises?

Development and/or construction agreements typically do contain force majeure clauses allowing the delivery deadline of the works to be extended for any force majeure event. Further, if no suspension clause is expressly included in the relevant agreements, it is likely that COVID-19 will qualify as a force majeure event for Spanish courts. As such, any party to the relevant agreement should be allowed to invoke force majeure and request a postponement of agreed completion and delivery dates. In this scenario, the Spanish principle of good faith would compel the parties to act consistently and to agree on a new date for completion or delivery.

13. Has the duration of validity of administrative authorisations pertaining to development/construction of real estate assets (in particular planning authorisations) been extended?

Royal Decree 463/2020 enacted by the Spanish government on 14 March suspended administrative deadlines, expiration deadlines (plazo de caducidad) and statute of limitations (plazo de prescripción). This suspension shall remain until 1 June, when the deadlines under the relevant licenses – for example for the completion of works – will resume.

Litigation and Regulation

14. Is the use of disclaimers for visitors or others coming on to the site of business useful for limiting potential future COVID-19 claims?

The use of "disclaimers" could be useful in certain cases for the purpose of limiting future liability claims arising from the impact of COVID-19 by visitors or other persons accessing the facilities.